Tight Supply of Cargoes with Invoices Dated This Month Drives Spot Premiums Higher, Pre-Holiday Stockpiling Expectations Provide Additional Support [SMM Shanghai Spot Copper]

SMM April 24 update:

During the morning session, SHFE copper 2605 opened lower with a gap and, after a brief rebound, continued to decline. The opening price was 103,060 yuan/mt. After opening, prices quickly dropped to a low of 102,720 yuan/mt, then briefly rebounded to 102,900 yuan/mt before resuming the downtrend to 102,410 yuan/mt. After stabilizing, prices fluctuated between 102,440-102,580 yuan/mt, then declined again to a low of 102,310 yuan/mt, with a closing price of 102,400 yuan/mt. The inter-month Contango price spread ranged between 140-70 yuan/mt, and the import profit margin for SHFE copper against the 2605 contract ranged from a loss of 40 yuan/mt to a profit of 20 yuan/mt.

Intraday, copper cathode buying and selling sentiment in Shanghai pulled back significantly. The selling sentiment was 2.62, up 0.05 MoM, and the buying sentiment was 2.59, up 0.03 MoM.. At the start of the morning session, suppliers offered standard-quality copper including Dajiang PC, Xikuang, and Yuguang at premiums of 10-30 yuan/mt, while Peruvian plates, Xiangguang, and JCC were offered at premiums of 20-30 yuan/mt, and high-quality copper Jinchuan (plate) was offered at a premium of 40 yuan/mt. In the second trading period, suppliers slightly raised prices. High-quality copper such as Guiye and Jinchuan (plate) traded at premiums of 40-60 yuan/mt, while Jinguan, Jinxin, and Jintun PC traded at ex-factory premiums of 20-40 yuan/mt. Registered SX-EW copper supplies were scarce, with only some Myanmar-origin cargoes in circulation, keeping offers firm at a discount of 10 yuan/mt. Non-registered copper traded at discounts of 80-60 yuan/mt.

Outlook for next week: from the invoice structure perspective, suppliers on the domestic trade side generally raised offers for cargoes with invoices dated this month during the session, pushing Shanghai spot copper premiums from discounts to premiums. Meanwhile, the price spread between cargoes with invoices dated this month and cargoes with invoices dated next month widened further, reflecting the ongoing impact of periodic invoice shortages on spot pricing. As a result, some downstream enterprises preferred to purchase directly from smelters to secure invoices for the current month. Demand side, copper prices remain at elevated levels, and downstream purchasing is generally cautious, driven mainly by rigid demand with limited willingness to chase higher prices. Additionally, with the Labour Day holiday approaching next week, some downstream enterprises have pre-holiday stockpiling needs, which may lead to a certain increase in purchases, providing periodic support for spot premiums. Overall, under the combined effects of a tight invoice structure, pre-holiday stockpiling expectations, and high prices suppressing demand, spot prices against the SHFE copper 2605 contract are expected to maintain premiums next week.